Bankruptcy protections

Bankruptcies typically are filed in one of four different chapters: 7, 11, 12 or 13. Chapter 7 is the most frequent filing and is available to both individuals and businesses.

Its objective is to provide a fair distribution to creditors of "any non-exempt property the debtor has and to give the individual debtor a fresh start through the discharge of bankruptcy," according to the American Bankruptcy Institute.

Chapter 13, the next most frequent filing, is a "rehabilitation vehicle" for persons "with regular income whose debts do not exceed specified amounts," according to the institute. It is designed to channel a portion of the debtor's earnings toward reducing debt to outstanding creditors.

The institute states the purpose of Chapter 11 bankruptcy which is available to individual and business debtors as "to rehabilitate a business as a going concern or reorganize an individual's finances," and Chapter 12 is designed to give relief to family farmers who receive regular income.